Laboratory Owners Determined to Persevere in Tumultuous Economy

When the financial crisis hit our country in 2008, LMT immediately responded with a survey of our readers to get a baseline for how it would affect our community. And as we promised then, we've kept our finger on the pulse of the community, sharing the results of periodic follow-up surveys; here's the latest.

Using phrases like "holding on" or "treading water," many laboratory owners say they are continuing to ride out the economic storm despite not seeing much relief last year.

While 15% of respondents to LMT's most recent How's Business? survey say business remained level from 2010 to 2011, half say it was down, pointing to pricing pressure, rising costs and fewer patients opting for restorative work.
On the other hand, 36% of laboratories say business was up in 2011, due to marketing and customer service efforts and increased efficiency through digital technologies.

So if half of respondents say business was down, and the other half say it was either up or level (which some say is the new up), is the glass half empty or half full? While it's certainly good news that one third of laboratories saw growth last year, we just can't paint a rosy picture of our current economic environment; the truth is, it's been a rough four years.

Case in point: Nearly 60% say that business during 2008-2011 was down compared to business during 2004-2007; in fact, 41% say it was "markedly" down (see chart on page 10 for details). And, when considering their profitability, nearly half of all respondents say 2011 was the worst of the last four years, and 2008 was the best.

Not surprisingly, it's the smallest laboratories that are having the most trouble navigating the storm. Not only do they have fewer resources to invest in marketing and new technology, their smaller client bases make them more vulnerable when traffic in dental offices slows down. While only a quarter of laboratories with five or fewer employees say business was up last year, 61% of larger labs say they saw an upswing. Similarly, full service laboratories were more likely to report growth in 2011 than C&B or removable operations.

Making Necessary Changes

Many of our respondents confirmed something else we already knew--this is not a community quick to throw in the towel. Yes, there have been lab closures and layoffs; however, there are many more businesses that are holding their own, albeit making sacrifices such as a reduction in benefits or working hours.

Some laboratory owners have made even more dramatic changes--ones that have resulted from taking a hard look at the future of their businesses. They have reinvented their operations to adapt not only to the ailing economy, but also to the changing climate in our industry. For example:

l Down as much as 30% during some months last year, Gary Iocco, Owner, Dimension Dental Design, CDL, Hastings, MN, was facing increasing pressure from clients who wanted lower fees. His answer: a three-tier pricing plan that has allowed him to retain business he might have otherwise lost to a less expensive lab.

"I told my accounts I couldn't lower prices on our premium restoration, but I could offer them two other options--a basic and mid-range restoration--so they wouldn't have to go elsewhere," he says. The basic and mid-range restorations require less labor--built up using two to three powders instead of six to eight, for example--and use a different quality of teeth or material (including non-precious alloy, which Iocco hasn't used in 20 years).

"When speaking to my clients about the new system, I compared it to how they set their own fees: they charge more for the procedures that take longer and I was doing the same thing," says Iocco. Many of his clients continue to prescribe the premium restoration, but some make the decision on a case-by-case basis.
l Business had also slowed down for Bill Atkission, who was operating a one-person laboratory in California until a few months ago. In addition, he had invested in an inLab system but was having difficulty converting his clients to the digital world. Then, about six months ago, he came to a realization: "I decided to be a different kind of dental technician and become a resource to dentists who are part of the CEREC community," says Atkission, Owner, Bella Vita Dental Designs.
Turning the perceived threat of chairside CAD/CAM into an opportunity, he began marketing the teamwork approach to CEREC dentists, educating them on how his inLab could work with their systems, and even offering to train them on the CEREC and how to stain and glaze. The approach has made him many new contacts and allowed him to pick up some anterior work from CEREC dentists who prefer not to do it themselves.

He is also the first technician to be certified by CADSmile--a company formed by renowned technician Eddie Corrales in California--which offers CAD/CAM dentists an in-office, same-day smile service. Atkission recently moved his laboratory to Asheville, NC, so he can offer the service on the east coast. "I'm feeling really positive about the changes I've made; things just keep getting better in the CAD/CAM world," he says. "And I'm having fun again."

l A few years ago, Owner Ron Wilson was working at full tilt in his one-person boutique laboratory, Vista Dental Technologies. Without a pool of technicians in the very rural area of Bigfork, MT, he opted to focus on the most profitable area of his business--removables--instead of trying to do it all, and explained to his C&B clients he could no longer do their work.

You know what happens next. "Soon afterwards, the economy took a turn for the worst and my workload took a hit," says Wilson. "I was making a living, but felt frustrated; I was tired of the Band-Aid approach and wanted to reexamine everything I'd been doing for the last couple of decades."

Wilson's answer was to bring in a partner from outside the industry, Mike Myers, who offered expertise in business administration, marketing and sales. Over the last year, business has improved and Vista has picked up a few new clients through strategies Wilson "never thought could work," including a new website and seminar sponsorships. Back to offering removable and fixed restorations, he's opted to subcontract some of his cases to alleviate the workload and is also doing some research and development on automated technologies.

"Most importantly, Mike has given me a fresh perspective on every area of my business. Now, I'm also free to do what I enjoy most, which is being a technician," says Wilson. "We're focused on the big picture; we're both in this boat and excited about paddling it together."

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A 25-year veteran of the department, Maribeth is an accomplished writer, expert at analyzing information and getting to the heart of a story. She is continually...See more in touch with lab owners/managers about what's happening in their businesses and especially enjoys creating reader surveys and delving into the results.

LMT Communications delivers the business strategies, information, dental laboratory news and education that dental laboratory decision-makers need to succeed. Through LMT Magazine and our LAB DAY shows, LMT works to advance excellence in dental technology, enhance the products, services and communication of dental technicians, and give lab owners and managers the tools they need to flourish. Learn More »